This post was contributed by a community member. The views expressed here are the author's own.

Politics & Government

Rechler Pulls Plug on EPCAL Deal

Proposal for 300-acre high-tech industrial park is now history, but Supervisor Walter is not at all unhappy with the news.

Rechler Equity Partners has abruptly pulled out of its deal to purchase 300 acres at the town-owned Enterprise Park at Calverton to build what it had described three years ago as a "high-tech industrial park" that would have ultimately created 7,600 permanent jobs.

In a letter prepared yesterday for overnight delivery to Riverhead Supervisor Sean Walter, Gregg Rechler, the group's managing partner, wrote that Rechler "hereby gives notice that it elects to terminate" its agreement with the town, "effective immediately."

Reached Tuesday afternoon, Walter reacted positively to the decision. "I'm absolutely happy," he said. "At $65,000 and acre, that was a giveaway of the Grumman property."

Find out what's happening in Riverheadwith free, real-time updates from Patch.

Walter's reference was to the decision made last year under his predecessor, Democrat Phil Cardinale, to agree to Rechler's request to lower the original purchase price of $35 million to $18 million due to the economic slowdown and declines in real estate values.

That request was granted through a resolution passed unanimously by the Town Board, which included two current board members, Councilmen John Dunleavy and Jim Wooten.

Find out what's happening in Riverheadwith free, real-time updates from Patch.

The voting quickly became a major issue in last year's political campaign. George Gabrielsen, who would win a council seat, even took out an ad charging his fellow Republicans, Wooten and Dunleavy, with acting like  "lemmings" for following Cardinale's lead.

Describing its proposal as the "Rechler Center for Business and Technology," Rechler had  promised in 2007 that, over a ten-year period, it would construct 47 separate buildings amounting to 2.7 million square feet of industrial space.

In July of this year, however, Rechler added 1,000 housing units to its proposal, a plan that, according to Walter, the majority of the current Town Board "would never accept." Nevertheless, in altering its proposal, Walter said that Rechler agreed to pay $125, 000 in return for a contract extension to give it time to negotiate its new plan.

"The town gets to keep that $125,000," Walter said Tuesday. "I'm going to use it to retain a marketing and zoning expert and subdivide the property, do the environmental work needed and put this thing in a position over the next two years so that when the economy turns around, we will have a subdivision map in hand.

 "Now we can control our own destiny," Walter continued. "It's a clean canvas now. Let's do this how any developer would do it. Let's do it in a business-like manner, which means doing the environmental work, doing the subdivision and otherwise doing the heavy lifting that is required to get the property marketable."

Rechler's decision to pull out of EPCAL comes in the wake of growing doubt over Riverhead Resorts' ability to come through with its offer to purchase 755 acres in another section of EPCAL to build a major resort attraction.

The Town Board has given Riverhead Resorts until Nov. 3 to put into escrow $3.9 million in overdue payments it owes the town. Walter said Tuesday that "he has not received a check" and that if the money were not received by early next week, the Town Board would most certainly vote to terminate its contract with Riverhead Resorts.

But even if the $3.9 million were to land in an escrow account by the Nov. 3, the date of the next Town Board meeting, a vote to terminate the contract could still come. This is because Riverhead Resorts' lead lawyer, Mitch Pally, said last week that the money would not be released from escrow until the Town Board agrees to a price reduction from $155 million to $108 million, something the Town Board does not seem inclined to do, if at all, until the money is released from escrow.

In a press releases issued Tuesday morning, Walter seemed to set the stage for the contract with Riverhead Resorts being terminated.

"Resorts and Rechler are two projects begun under my predecessor," Walter said in the release. "They probably would not have been my first choice as to how to develop EPCAL. It may be that, when all the shouting is over, Riverhead will be 'back to the future' at EPCAL and we begin with a clean slate."

We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?